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COBB v. ALLSTATE INS. CO8/1/1995
This case comes to us pursuant to M.R.Civ.P. 72(c) on a report from the Superior Court (Kennebec County, Chandler, J.). In the underlying action, Richard Cobb asserts breach of contract claims against Insurance Company of North America (INA) and Allstate Insurance Company (Allstate), the two insurers providing his underinsurance coverage. Because the Superior Court erred in prorating between INA, the primary insurer covering Cobb, and Allstate, the excess insurer, the money recovered by Cobb from the underinsured tortfeasor, and rejected INA's request that it, as the primary insurer, be credited with the entire amount, we vacate the judgment and remand for the entry of a summary judgment in favor of INA.
Cobb, while driving a car owned by his employer, Eastman Kodak Company, was involved in an automobile accident with another vehicle. The bodily injury limit for liability coverage under the automobile insurance policy insuring the other driver was $25,000. Kodak carried $40,000 uninsured motorist coverage on its car under a business automobile policy issued by INA. Cobb carried personal automobile insurance issued by Allstate, providing uninsured motorist coverage up to $100,000 for a vehicle that he was operating.
Cobb settled his personal injury claim against the driver of the other vehicle for the full $25,000 policy limit. Because his damages exceeded $25,000, Cobb then brought suit against both INA and Allstate seeking to recover the full amount of underinsured motorist coverage available to him under the two policies. Both policies contain clauses reducing the insurer's obligation to an insured by the amount of any payment received from the tortfeasor. Because Cobb
Following Cobb's rejection of its offer of $16,500, INA moved for a summary judgment on the ground that it, as the primary carrier, was entitled to apply the $25,000 recovered by Cobb from the tortfeasor as an offset to its $40,000 exposure. The Superior Court decided that the funds received by Cobb should be allocated between the two insurers based on the percentage of the total amount of damages paid by each and denied summary judgment. Over Allstate's objection, the Superior Court granted INA's motion to report the case pursuant to M.R.Civ.P. 72(c).
The question presented by the report is of "sufficient importance and doubt," that we accept the report. Toussaint v. Perreault, 388 A.2d 918, 920 (Me. 1978) (emphasis omitted) (citing State v. Placzek, 380 A.2d 1010, 1014 (Me. 1977)). The issue is one of first impression in this State and concerns not only these parties, but is also important to Maine's citizens and the companies that insure them. See Giles v. Maine Fidelity Life Ins. Co., 402 A.2d 473, 475 (Me. 1979) (citing Placzek, 380 A.2d at 1014).
Because Allstate's policy is excess, it has no applicability at all until the primary coverage is exhausted. The denial of any setoff to Allstate is a logical corollary to the lack of risk it faces until Cobb has sustained damages above $40,000, the limit of the primary insurer's responsibility. In so holding, we are in agreement with most of the jurisdictions that have considered the issue. See Chicago Ins. Co. v. Lumbermen's Mut. Casualty Co., 503 So.2d 916 (Fla.Dist.Ct.App. 1987) (rejecting excess insurer's equitable subrogation arguments); Georgia Farm Bureau Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 255 Ga. 166, 336 S.E.2d 237 (1985) (holding excess insurer, the insurer receiving premium from insured, responsible for covering damages in excess of liability coverage recovered from tortfeasor); see also Chester v. State Farm Mut. Auto. Ins. Co., 227 Ill. App.3d 320, 169 Ill.Dec. 315, 320, 591 N.E.2d 488, 493 (1992); Dairyland Ins. Co. v
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